Confident Argentina Deserves a Chance to Join the OECD

Confident Argentina Deserves a Chance to Join the OECD
Juan Mabromata/POOL photo via AP
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This fall, Argentine Foreign Minister Jorge Faurie was in Paris for a meeting of the Council of Ambassadors of the Organization for Economic Co-operation and Development, or OECD. While Argentina is not a member, or even a candidate, Faurie was ubiquitous, marketing his government as a future member of the world’s most elite club.

The Argentine government is desperate for a shot at OECD membership, and in Paris, Faurie assured members that Argentina had embarked on a “confidence-building process.” That confidence will be critical, given Argentina’s tumultuous history of whipsawing between growth and recession, between statism and open markets. Sure President Mauricio Macri is a multimillionaire and a Davos regular, but his predecessor was a pro-Russia firebrand hostile to investors. So while Macri’s agenda has raised expectations worldwide, investors are understandably skeptical that Argentina will stick to this path.

But it is precisely Argentina’s volatile history that should have made it appealing to OECD members when they gathered Friday for yet another inconclusive discussion on possible expansion. After all, its pursuit of membership -- a lengthy process that has all the charm of a colonoscopy -- is designed to cement Macri’s transformative policies, including the elimination of capital controls and export taxes. For that reason, and given the size of the Argentine economy and its influence in Latin America, the OECD should allow Argentina to begin the process for membership. 

The OECD was founded in 1961 to share lessons learned during the Marshall Plan about running an open-market economy and a liberal democracy. It has grown to include 35 members across five continents, and its principal goal is to "promote policies that will improve the economic and social wellbeing of people around the world." Sometimes referred to as the “developed countries club,” it spreads the gospel of sound economic policy and good governance. The United States in particular has found it to be an important channel for advancing U.S. values and policies and creating a level playing field for U.S. businesses.

But the OECD has a second, equally important job: solidifying its recommended policies in its own member countries. The national policies of members are regularly judged against OECD standards for compliance. That is why after the Cold War, OECD membership expanded to Eastern European nations that wanted to fortify their transitions to market economies. That bet paid off; these former Soviet republics have sustained their economic models for two decades.

The OECD could offer Argentina the same service it performed with Eastern Europe. The organisation’s peer review mechanisms could help make Macri’s transformative economic reforms permanent -- all the more if OECD membership gives Argentina’s economy a boost. 

Unfortunately, the OECD is harder than ever to join. Discussions on potential invitations to six countries -- Argentina, Brazil, Bulgaria, Croatia, Peru, and Romania -- are stalled in Paris as members grapple with the character of these governments and the potential challenges of preparing new candidates for membership. The Europeans have demanded a new European member for every non-European candidate. For its part, the United States is cautious about expanding too quickly, given the OECD’s reliance upon consensus for decision-making and what Washington sees as poor leadership by Secretary General Angel Gurría.

There are Argentina-specific concerns, too, primarily that it might swing back to the populist and protectionist model that voters jettisoned when they elected Macri in 2015 and rejected again in midterm elections in October. One only needs to recall the spoiler role Argentina played in the G-20 under the Kirchners to recognize the danger of how disruptive a single member can be when its values are not aligned with the rest.

The potential for a policy reversal in Argentina is indeed worrisome, but before writing off Argentine candidacy, OECD members should consider the example of Mexico. When the OECD admitted Mexico in 1994, the country had only recently ratified NAFTA, and Zapatista guerrillas were still marauding around Mexico's south. OECD membership helped institutionalize Mexico’s new fiscal policies and other difficult economic reforms. Today, even a victory by the far-left presidential candidate Andrés Manuel López Obrador would not reverse Mexico’s pro-trade orientation.

The United States is on board with Argentina’s candidacy; U.S. President Donald Trump promised Macri Washington’s support when the two met in the Oval Office in April, and Vice President Mike Pence repeated that commitment during his August trip to Buenos Aires. Behind the scenes, the United States has been reasonably successful in pushing its European partners to consider Argentina’s candidacy, but less so in getting them to withdraw demands for a matching European candidate. Importantly, candidacy is not the same as membership. All Argentina is asking for is to start a multi-year audition, during which it would demonstrate its credentials in the hopes that the OECD helps preserve its historic advances.

Benjamin N. Gedan is a former South American director on the National Security Council and a fellow at the Woodrow Wilson International Center for Scholars and the Council on Foreign Relations. William Schuette is a research assistant at the Wilson Center. The views expressed are the authors' own.

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